Power Lunch - S&P 500 rises to record higher as market shakes off October malaise 10/9/24

Episode Date: October 9, 2024

Markets are higher for a 2nd-straight day, with the S&P 500 jumping to a new record. Tech stocks are powering higher, and investors are shaking off geopolitical concerns. Stocks maintained gains after minutes from the Fed’s September meeting, where it cut by a half percentage point, revealed that a “substantial majority of participants” favored cutting rates by the larger size. 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.

Welcome to Power Lunch, the minutes of the Fed September meeting show quite a bit of disagreement over the issue of 25 or 50, the 50 base point rate cut. They ultimately agreed. I'll get to that in the second. Let me show you first where they agreed. All participants agreed it was appropriate to ease. They judged it was appropriate to continue the process of reducing the funds rate. And if the economy evolved as expected, they said it was appropriate to move to a more neutral policy stance. Most saw policy as restrictive. They disagreed, however, or how we're. restrictive to be. A substantial majority, it says, supported lowering the funds rate by 50 basis points. However, it did not say how many or what, but a substantial majority wanted the 50. Recalibrating policy, they said, would bring it into better alignment with the inflation and

labor markets. Some, however, would have preferred 25, and a few others said they could have supported 25. So some plus a few, we don't know how many that is, but it was more than. than just the one descent is what we're learning that supported just 25. Several noted that 25 would be in line with a gradual path of policy normalization. A few noted 25 would be more predictable. Now, on the economy, some worried there was differences here that probably reflected the differences over 25 or 50. Some worried that the easing in the labor market could transition, quote, to a more serious deterioration. Many saw the economy growing at trend over the next few years and almost all saw diminished risk to a

inflation and downside risk to employment. Several worried about consumers spending from cooling of the labor market. Some were concerned the pace of hiring was not strong enough to keep the unemployment rate from rising. So this was all before that recent October, September employment rate that we got in October, but so there was a lot of concern about the job market. Further labor market cooling was not needed to get to the 2% inflation target. And a couple who are concerned, though, about upside inflation risk from geopolitical events very much the way we heard this morning from Dallas Fed President Lori Lowe. So guys, back to you, I think this 25 or 50 debate is something that could have an impact on future rate cuts.

Before the minutes, I haven't seen it since then. There was a one in five chance the Fed did nothing in the futures market for the November meeting. 20% probability of no cut in the futures market for November, guys. So, Steve, let me just linger if I might for a second here. There was one dissent, but does that dissent necessarily mean that that individual, wanted no cut whatsoever or was just adamant that they wanted a 25% basis cut and they weren't going to go for 50 like everybody else apparently did, even though some would have preferred 25. Yes, Tyler, as usual, a pinpoint clarification question from you, sir. That dissent that was out

there was for preferring a 25 versus a 50. And what we learned in these minutes, again, thanks for the chance to clarify, is that there were a bunch more people. We just don't know how to how many that would have gone along with the 25 had it been apparently either the majority decision out there or if they had their druthers. Remember, not everybody votes, only 12 to 19 votes. So we know that 11 of the 12 voters supported it. It says a substantial majority supported 50. The question becomes, Tyler, how many folks are on the fence for the next 25? If you get, for example, tomorrow a higher than expected inflation print, if we get another strong jobs report, does that put more on the fence? Tyler, while I'm talking, I'm going to log into my computer, which of course I'm forbidden to do while I'm reading the minutes in locker, but I'm going to give you a fresh quote as soon as I can on the probability.

It doesn't look like it changed. It's still a 20% probability I'm seeing now of no change, at 80% probability of a quarter, and then going to, going into the December meeting an 85% probability of another quarter. So the market did not change based on these minutes. And I don't know if it should have or shouldn't have, but we do know there's a bit more support now, Tyler, than there was for just the 25 than we thought, either from the statement, the dissent, and from the press conference.

All right, Steve, hang with us as we continue our conversation with Stephanie Roth, chief economist at Wolf Research. Stephanie, welcome. Good to have you with us. Good to be here. What did you just hear, and were you at all surprised by what appears to be a little bit of a split among the voting members of the Fed board between 25 basis points or 50? No, I don't think it's too surprising to hear that there was a big debate in the room. I think that was largely expected.

Powell went in there. He probably wanted the 50. That kind of fits with the articles that were leaked ahead of the meeting, that it was probably coming from the top that they were looking for a larger cut, and they got a number of people on board. So, of course, a substantial majority was in favor of it, but it probably wasn't Bowman. There was the only one that shit.

They only wanted 25. Where does this leave us now as we look ahead to November? We had one more jobs report. The most recent one was fairly strong. A lot of people think it's taken another half point cut out of the probability for the remainder of the year. Is that what you feel? Yeah. I think 50 basis points is off the table.

So now the question is, are they going to go 25 or like Steve was highlighting? There's a 20% chance, at least as according to the market, that perhaps they don't cut it all. Base case for us is that they're able to cut tomorrow's CPI should be supportive of that, something with core PCC coming, core CPI coming in, 0.3, which would be consistent with the core PC of about 0.23%. I guess that leaves us, I guess the problem is the next job report is going to be distorted, not just by the hurricane, whatever happens. We have Helene, obviously, whatever's going to happen with Milton, by the strikes as well.

I mean, Diane Swank was saying we could see a minus 40K drag on, for instance, manufacturing payroll. How are we supposed to figure out the trend with all of these cross currents? So it's tough, but the BLS does publish a series within it that excludes the striking members, and then a week before the payrolls print comes out, they publish a strike report. So we should have a good sense of how we can adjust that data for the striking members. There are some people that might be on furlough that could be about a 4,000 hit. But generally speaking, we should be able to subtract those workers. But to your point, on the hurricanes, that's a really difficult one to assess.

Why is the 10-year doing what it's doing? Because it is. wants to. Why? Why? Well, because the market is now went the other way. Earlier before the payrolls print came out, the expectation was we're heading into this hard landing. I don't think that was the right view. Then after the print comes out,

now it's no landing. I don't think that's the right view either. It's probably somewhere in between. And the tenure probably will come back. That means soft, right? If it's not hard and it's not no, it means kind of softness, right? I think that's exactly the message. And yeah, the tenure might be backing up for a little while until the market can come to

sort of the conclusion that maybe soft is more likely, but in the near term, probably nothing's going to stand in its way. So the tenure is kind of signaling that the economy is in pretty good shape. It's certainly not signaling that it needs, that interest rates need to go down to stimulate the economy, right? No, no. And we don't really need too much to stimulate the economy at all because the economy is doing just fine.

We have almost real consumer spending running at about 3%. The three-month trend in jobs is 186,000. The economy's fine. But rates are still elevated, and it makes sense. for the Fed to be still normalizing interest rates. I just think it's going to be hard. We're in a little bit of a fog, I think, right now, as to your point. So the market has now taken us from pricing in like another point of cuts maybe this year,

maybe not quite that much to something much lower than that. And, you know, so with time with the stock market is responding well, 10 years, you said, pointing to a stronger growth outcome for now, but it's going to get a bit foggy. So you figure then, no 50 half-point cut in November, but maybe 25, quarter point in November, another quarter point in December? Is that your sort of base case and then continuing on into 2025? Base case is that they'll do two more this year. The risk is that they go in November and maybe skip December or there's just kind of one more this year.

It will probably depend on the payrolls prints. And if we get another really, really strong print, which given the hurricanes, it's probably not super likely. As Kelly points out, I mean, the hurricanes are going to affect those numbers and the strikes. And it's worth noting that in July, the BLS came out and said there was no discernible impact from the hurricanes on the data. But then when you looked at the state data, there was a really large swing in the state of Texas. So there did appear to be some impact, but it wasn't necessarily met the BLS standards in terms of statistical. Steve, any final thoughts? I assume you're still there.

Yeah, no, I just think what's been said is correct. We have to watch the data here. I don't know that the quarter point cut in November hangs by a thread to quote my favorite movie Lord of the Rings. it's probably a bad inflation report and another. I mean, I think the Fed still cuts and probably still cuts again. I think the idea of a skip is something that could be on the table for January. I think 50s are off the table. And we have to watch the data. I think we've got to listen to people.

I don't know the count of the people who were in that 25 can't. I know it sounded to me this morning. Lori Logan from Dallas sounded she was more of a 25 person. Certainly we know that Michelle. Bowman was, but there's got to be a couple others out there, and we'll hear hopefully over the next couple weeks who they are when they make their public statements, and we'll try to figure out who's on which side of the 25, which is on the 50, because when the data then come in, if it comes in stronger, you know, a 50 becomes a 25 and a 25 could become a skip.

Stephanie is nodding. Steve Leesman, thank you very much. Stephanie Roth, thank you as well. Nice having you here. Let's get to Rick Santelli now on what we just heard from the Fed in those minutes. It's Rick, what now? You know, to me, I'm going to pretend Tyler asked me the same question he asked our guests. Why do you think 10-year rates are going up? Well, Tyler, I'll give you my four reasons and reverse order of importance. Number one, maybe the economy. The economy in many ways is doing a bit better than many anticipated.

Next would be the Fed. Probably was a bit too aggressive in the market is showing its muscle. We've just had a conversation about how the Fed and some. central banking in general is the center of the universe when it comes to markets. But that isn't necessarily true. The markets are expressing a view here. I mean, I don't think it's a coincidence that all of this started happening after the rate cut. As a matter of fact, if you look, we're now up 40 basis points in a two years since the rate cut closed and 43 basis points in a 10. Okay, my next on the list would be politics, okay? We have debt and deficits, and neither candidate

seems very interested. We have Janet Yellen using T-bills to pay our servicing of the debt, which is quickly approaching $1 trillion a year. And then last, and the number one answer on my board is deficits in debt. Deficits in debt. Nothing is going to be more clear, in my opinion, that the closer we get to the election, the more this potentially could happen. But don't underestimate what the market sees with regard to the Fed. The Fed has a bias here to ease. central bankers have a bias to ease. Think about how we got into the debt problem. If it wasn't for central bankers keeping rates so low, governments probably wouldn't have been able to spend so much more than they were taking in. That definitely is a worry of the markets. And as you see

on all the charts, maybe the other news is that all maturity treasury yields today are higher than yesterday's, and the tenure in particular is now six sessions in a row trading higher than the previous day's high yield. Very unusual, building momentum. Don't underestimate that the fact that the market can push against the Fed. Back to you. All right, Rick, thanks very much. Rick Santelli, explaining it very well to me. Thank you.

We've got lots more on the menu here on Power Lunch still to come. A new CNBC investigation finding Novo Nordisk's Ozempic and other wildly popular obesity drugs are being actively counterfeited and illegally diverted from other countries in open marketplaces online and shipped at cut rate prices to the U.S. That full investigation is further ahead. Plus, the Justice Department is looking to give Google its own medicine. Regulators are considering a breakup of the search giant. We'll lay out exactly what's on the table and what it could mean for investors coming up.

Google shares are lower today by 2.5% now after the DOJ signaled it's considering a breakup of the company as an antitrust remedy. After the search giant was found guilty of operating a monopoly. Let's get in our own aim and jabbers. and CBC.com tech reporter Jennifer Elias here with us to discuss the ramifications of this in today's tech check. Amin, let's start with what we know and how serious a breakup is as a possible maneuver here. Well, look, Kelly, it's definitely on the table. There's no question about that. But if you look at this 32-page filing that the Department of Justice put in about a little after 9 p.m. last night,

there's a lot of language in there around remedies having to do with, you know, changing the contracting, Remedies having to do with data sharing, remedies having to do with behavioral modifications by Google, and not a whole lot of language around what they call the structural remedy. That's DOJ code for breaking up Google. So if you'll just look at the document, the words on the page, it looks like the DOJ is farther down the road and it's thinking about all these other types of remedies that it is about a breakup. Clearly that's on the table. They reserve the right to do it if they get there, and we might get that later this fall.

but for right now a lot more detail on some of these other things. Jennifer, let me turn to you and get you to put your finger on the sort of the nub of the issue here. Is one of the big issues, as Amon just pointed out, the nature of the contracts that Google asks its partner businesses, whether it's Apple or whomever to sign? Yeah, I think the issue the DOJ takes here is with the exclusive contracts that it has with, say, Apple. in Samsung, and this prevents other search engines and other competitors to be able to be seen. So one of the things that they had mentioned in this filing is wanting to offer a choice screen, something that they've also asked for in Europe.

And so this is something that seems more in line with a realistic view of what they can do, although something like excluding an Apple contract may actually hurt Apple more than Google because Google pays them billions. Yeah, with that, I mean, that looks, Aiman, like one remedy, a behavioral change, a contracting change. It could make some sense there to give people, whether you're on an Android phone with Samsung or whether you're working with Apple, to give a choice of which you use as your default search partner. Yeah, absolutely. And that's what the Department of Justice is thinking about.

There's a lot of beard stroking going on in this document because they're talking about things that are possible, things they might do. nothing guaranteed here in this document at all. This is a long process. One of the things that's going to happen now at the DOJ is, even though this has been going on for years, this case, they haven't actually had discovery in this case in several years, so they don't have current information about what's going on inside Google, how these markets are actually working in real time today.

So they're going to do a whole new round of discovery. They're going to get access to Google's internal financials and documents, emails, and all the rest of it, in order to understand where these markets are right now. as they come up with their final proposal on remedies, which will be due before the end of the year. And that's when you'll see the DOJ actually put some meat on the bones, or mixing my metaphors here, finish the beard scratching and get down to the actual shaving here. I think that goes together, you know, meat on the bone and beard scratching.

And Jennifer, is there- Very masculine metaphors today. It is. Is there anything Jennifer, the company might do now before those final remedies come down to try and soften what they could say? I don't think so you know the vibe right now in Mountain View according to my sources is very much heads down very focused on what there's a lot going on within Google there's a lot of competition around AI and this seems like such a broad filing and what the DOJ is asking so I'm not sure employees quite take it seriously yet and leaders haven't said anything they have a lot of incentive to keep the employees focused so I think until they actually you know see some some movement happen and see that the DOJ may have some understanding of how they could potentially remedy these, which may not come for a couple of years,

then they're going to kind of keep focused on what they're working on. Yeah, it's very interesting. This is going to play out over time, and it will be interesting to see whether Google elects to fight or whether they elect to negotiate on this. That will be a very important development when we learned that. Jennifer, thank you. Amen, thank you as well. And still to come, the XLU Utilities ETF is up 24% this year. Growing demand for electricity helping drive those gains. Now, one trader is changing their tune on the group.

The market navigator will sail on in next. Welcome back to Power Lunch. Stocks are near session highs, the S&P touching a record earlier on. The Dow is up 321 points. But the NASDAQ is lagging somewhat up only a third of 1%. And some utility names in particular, like Vistra and Constellation Energy, are getting attention for being in the red on today's strong tape. In fact, the utility sector is up 35% the XLU year on year, but there are some signs now that trade could be overextended.

Joining us to talk more about that is Katie Stockton, founder and managing partner of Fair Lead Strategies. I was just talking about you, Katie, with regards to Nvidia, but in the energy trade in particular, what are you looking for here? Well, we move from an overweight position or recommendation to an equal weight one, so not a big call. But listen, I mean, it's had such a good run. It is the top performer as of Q3. And year to date, it's just a close runner up to technology and communication services, which of course have benefited from the mega cap leadership. So we feel that the utility sector is poised for consolidation at a very minimum in here.

XLU had broken out to a new high, and that is a bullish long-term development. But you can see on the chart that the up move is really, really very steep. And now it shows signs of exhaustion based on our overbought oversold metrics, both on the daily charts and the weekly charts. That means short to intermediate terms. So we're more comfortable with an equal weight or perhaps an underweight stance here in the near term as those gains are digested. Would there be any trading recommendation for those who might, I don't know if they'd be tempted to short something quite like this, like a steam train or a freight train. But what would the trade be here with regards to the XLU? We generally don't make short recommendations for things that are near or at all-time highs.

It's usually against our better judgment, especially utilities, which have such a good yield to them typically. But if somebody does think that yields are going to continue higher from here, we think they continue higher near-term, but not over the coming months. We're actually looking for 10-year yields to top out sort of in the low fours and head down to the low threes. So with that in mind, utilities will have their turn again in terms of relative performance. But for someone who thinks that yields may just continue to go higher, well, then they may consider actually reducing exposure just to the utility sector more broadly because utilities tend to underperform in that environment. Katie, we have to go. But are you bearish? I mean, I'm hearing consolidation on Nvidia. Consolidation on the XLU and the tenure heading into the threes? What possible? That doesn't sound like storm clouds practically. Yes, storm clouds, that would be pretty accurate. We're neutral, both short-term and long-term in our research, and neutral usually doesn't satisfy anyone, but truly our indicators are supporting consolidation, meaning more sideways, but choppy price action, perhaps instilled by NVIDIA.

InVIDIA has a good triangle breakout that's a short-term positive, but it still has signs of exhaustion longer-term. So we don't think the mega-caps will be the contributors that they were certainly in the first half. All right. Maybe leadership will change, but it's a tall order. Katie, thank you. We appreciate it today. Of course. Katie Stockton with Fairle. Tye. All right, you want storm clouds? We're going to bring you some storm clouds. Hurricane Milton's slight course change. Could spare Tampa from the severe damage we've heard about over the past few days. On the left, that iconic bridge in Tampa heading southbound on, I think it's 275. And on the right is Fort Myers hit so hard a couple of years ago, but I believe it was Hurricane Ian. Could the western side of Florida be at risk now?

Bigger part of it, maybe not just Tampa. We'll get the latest from NBC's Al Roker. Plus, using Lowe's and Home Depot as an insight into the economy, a new call from Loop Capital Markets, explains the impact of hurricanes, rate cuts in the port strike on home improvement company stock. We'll speak with an analyst who was behind that call in a little bit. Welcome back to Power Lunch.

I'm Bertha Coombs with your CNBC News Update at this hour. Vice President Kamala Harris' presidential campaign crossed the $1 billion fundraising mark in September, just two months after she took over as the Democratic candidate. That's according to NBC News. Her rival, former President Donald Trump, has raised just $309 million for his campaign through the end of August. CBS Health Group and United Health are demanding that Federal Trade Commissioner Chair Lena Khan and two other commissioners, recuse themselves from a lawsuit that accuses the companies and others of inflating insulin prices to boost profits. In separate court filings, the companies say public statements from the commissioners have prejudged the matter and shown serious bias. The FTC today declined CNBC's request for comment.

And Wimbledon line judges are out for next year's tournament. The prestigious event announced today that it will no longer use humans to provide. form the task and will instead replace the judges with an electronic line calling system. The technology will be in place for all qualifying and championship matches starting in 2025. A lot of talk, Tyler, about bringing in AI to deal with a lot of these issues in sports. I think they've done it already in Europe in soccer for lines. I wonder what John McInroe thinks. You cannot be serious. You cannot be serious. You cannot be serious.

Pretty serious. All right, thanks, Bertha. We'll see. All right. The shares of lows are moving higher, not lower, and Home Depot, marginally lower, as Loop Capital upgrades both stocks to buy today. The firm raising its estimates for both companies on the back of an easing rate environment. This also marks the first time since 2021 that Loop has upgraded either stock. Joining us now to discuss is the analyst, is the analyst. Laura Champine. She is Director of Research at Loop Capital, Senior Consumer Analyst. Laura, welcome. Good to have you. you with us. It has been a long time since you've made any moves on either of these stocks, so you must feel a pretty compelling argument on both of them. Yes, thanks for having me. The timing of our call is obviously about seeing the first easing of interest rates. Mortgage rates, we think over time will move lower, but we look at the past couple of years in some big categories like appliances, flooring, mattresses. You've seen unit declines over that period similar to 0809. So I don't think that rates are going to plummet and you'll see massive demand. I do expect things to get better next year and for an easing fed to be

part of that story. We're looking at a chart here of a five-year performance of Home Depot versus lows and lows has outperformed it by a considerable amount. Do you think that outperformance will continue for lows or do you have a, do you have a favorite one here? So I think part of what drove that out performance was Marvin Ellison, who is now six years into his tenure at Lowe's, and he's helped them close the gap on a lot of performance metrics, notably margins. I'm excited, though, about Home Depot's recent acquisition of SRS, which lets them go after a complex pro that's doing roofing, landscaping pools. I think that'll actually inflect H.D.'s growth higher over the next five years, and we prefer at this moment Home Depot to Lowe's for that reason.

Interesting. Clear answer. Thank you. And we actually checked in with Home Depot last hour, Laura, on the way they're prepping for the hurricane. They have equipment going down. They're trying to have supplies at the ready to open stores and rebuild. What's the typical kind of pattern like in terms of they have to close? The storm hits. They might get a bit of Russian demand afterwards. And they've seen this with Helene as well. So right now you're seeing disruption, which I'm sure they called out. and it's cost disruption because they're trucking things all over the place.

And that leaves shortages in other stores. And it's expensive to service customers in the middle of these storms. Over the next nine months, you could see a lift of one to three percentage points of sales for this company as insurance payments start rolling through, especially some of the damages from Helene, which were more water storms. That work needs to be done soon, or it just gets worse. So I would expect a lift, obviously not this month, but these national players like Home Depot, like lows, are very well positioned to help people rebuild and repair the damage that they're likely to see. So it's a long-term positive for them, but not something that happens quickly at all.

Doesn't happen quickly because most consumers can't pay out of pocket for these repairs. They have to wait for the checks to come in. We're hopeful that those will be expedited. I think for the water damage it likely will be when sometimes the insurance companies will drag their feet. Laura, thank you very much. We appreciate your clarity today. You bet. Thank you. Laura Champine, we appreciate it. Loop.

Loop capital. There you go. Coming up a CNBC investigation revealing counterfeit OZempic and other weight loss meds being sold online and illegally shipped into the U.S. We'll have a sneak peek of OZempic underworld, the black market of obesity drugs next after this. Welcome back, everybody. A new CNBC investigation reveals how counterfeit versions of Novo-Nordas OZempe and other weight-loss drugs are being actively sold online and shipped illegally from other countries into the U.S. It's a worldwide problem. The pharmaceutical industry poses serious health risks. Here's Melissa Lee with Ozempic underworld, the black market of obesity drugs. Not far from the majestic Rocky Mountains in Boulder, Colorado, is an ordinary suburban neighborhood.

a quiet, tree-lined street, and this modest light-gray home. Not the kind of place you'd imagine an investigation into black market OZemPEC would lead, but it did. Our look into counterfeit weight loss drugs started with purchasing OZEMPIC online from Labor Beauty, a company we thought was based in Colorado. What we found was that it's part of an international marketplace, where criminals are either brazenly counterfeiting these drugs or buying the real thing overseas on the cheap. and illegally shipping them to the U.S. to turn a profit.

The main targets, Novo-Nordasque diabetes drug, Ozempic. Discover the Ozempic trisone. As well as its obesity drug, Wigovey. Discover the power of Wigovi. And Eli Lilly's Monjaro ends upbound, all in a class of wildly popular weight loss drugs known as GLP-1s. The Ozempic we bought from Labor Beauty cost $219, while real Ozempic goes for nearly $1,000 for a month's supply.

The company's website and corporate documents claim the operation is located in Boulder, Colorado. But the Ozempic we ordered from Labor Beauty was shipped via DHS from this office building and Cherjad Huang, China, off an elevator and behind this unmarked door right to us at CNBC headquarters in New Jersey. Let's open it up and see what we have. It's a plain cardboard box. It doesn't appear to have any refrigeration, although it's supposed to be refrigerated. This looks like it might have been a refrigeration pack at one point, although it's warm now.

It does say Ozempic on it, one milligram, and here's the Novo Nordisk logo, and here's the pen. Looks like the real thing, but let's see what's inside. Was this real Ozempic that was diverted to the U.S.? or a fake? And why did it come from China when the company has a Colorado address? We'll answer that question. But first, our investigation brought us to the UK, where hundreds of counterfeit OZemik pens have been seized.

It's hard to tell what's real and what's not. The fakes are that good. Andy Morling is Deputy Director of Criminal Enforcement for the Medicines and Healthcare Products Regulatory Agency. So we'd like to have a guess which one is the genuine and which one is the fake? This one is real. The other one with a purplish pen isn't. It is to us a very crude,

copy, not sophisticated in any sense at all, but it's enough to make people who don't have this level of knowledge and don't have the comparison to make, inject this into themselves and cause themselves significant harm. A total of 869 counterfeit OZempec pens were seized. They're actually relabeled insulin pens. These are completely counterfeit products manufactured somewhere. We don't know exactly where and made to look very much like Zempic pens. Now, back to the OZempic we bought.

online. Novo Nordisk says the OZembek we received appears to be diverted legitimate product and was produced for and distributed to the Chinese market during late 23 and early 24. Therefore, it would be unauthorized, unapproved for the U.S. market. The company went on to state that it cannot confirm the sterility, which may present an increased risk of infection for patients who use the counterfeit product. Still, one question remained. What is the connection between this house listed on the Labor Beauty website and this office in China. The homeowners told us they have no connection to the Chinese Ozempic seller at all. Labor Beauty did not respond to our requests for comment.

The day after we sent that request, the Colorado address was scrubbed from the website. And as far as that address in Boulder, Colorado, the labor sales representative told me on WhatsApp that it was the previous address of their U.S. warehouse. Enforcement sources tell us that the OZempsonsorses. We received from China is in fact connected to an ongoing federal investigation into ozempic packages being shipped into the United States. By the way, you can watch our full investigation by scanning the QR code on the screen with your phone or by going to cnbc.com backslash ozempic underworld. So some of the pens, like the ones that were in Britain, are filled with insulin with insulin. The ones that you received here were filled with what, or do we know?

The one that I ordered from China was real OZempe. Was real OZempe. But it was somehow bootlegged around. Exactly. And that's how a lot of criminals do it. The arbitrage between the list price here in the U.S. and what they can get it in that country is a lot. So that could also, that could be profit margin if you think about it that way.

In China, for instance, OZMPIC costs less than $100 if you have a prescription. If you steal it, it's free. So that's how much the criminals can make. And so then they'll come in and they'll either have bought it at a very, very low price or have stolen it. They will sell it via online and you will pay $200 some dollars as opposed to the $1,100 or $1,200 that you might have to pay for work. So I think I'm getting a bargain. The problem with the real is then because even if you're getting a real product, you don't know how that product was handled. It needs to be refrigerated. It could be sitting

in a warehouse for months, not refrigerated. It could be sitting on a hot tarmac for hours, not refrigerated. And that affects a sterility and that could have serious consequences. Not to mention if you could be injecting something else into yourself that you'd How would you possibly know whether it was the right thing? I mean, are the companies able to do anything to blockchain? Can Bitcoin fix this? They are trying everything right now. It's a very, very serious problem.

All the pharmaceutical companies have internal investigation units. They team up with local law enforcement officials, and they're going after these epicenters of counterfeit drugs, in particular for the weight loss industry, China, Turkey, Mexico. The drugs themselves are in short supply in many cases, aren't they? In many cases, yes. We'll go via whatever the name brands are. Right?

That fuels the demand. That fuels the demand. Desperation for people to do this. I wonder if that's why, because there was this whole fight this past week about how they've taken some of those ingredients off the short list. It's caused its other stocks to fall that were providing those alternatives. And they said to the FDA, this was capricious and we don't understand why you did it. And they might be trying to balance the risk of people who can't access the real thing

ending up with something like this. Possibly. Who knows? Melissa, thanks. So check it out. What is on? CNBC.com. Backslash OZempeak Underworld.

There you got it. Melissa, good to see it. Thanks. In the meantime, Boeing shares are under pressure as its machinist union strike continues. S&P Global now issuing a negative outlook for their credit rating. We'll trade it in three-stock lunch. And as we head to break, CNBC is celebrating Hispanic heritage. Here is McDonald's chief supply chain officer Cesar Pena sharing their story.

Anytime that we could get groups of people together to kind of, to connect in an authentic way. I think ultimately what that does is it allows us to learn about each other. It allows us to appreciate the differences and the similarities that we have. And ultimately, that is how people end up leading with empathy and compassion. And I think those are two ingredients that are critical for high engagement workforce and certainly for an inclusive environment. Welcome back. Let's get a quick check on the markets with the Dow up almost 1% today, even despite Boeing being a drag. And the S&P 500 hitting a new all-time high early in the day at 5790. We're up half a percent there and the NASDAQ as well. But check out shares of

Vistra, the utility, which passed NVIDIA as the best stock in the S&P this year. But it's now taking some profits. It's down 4 percent today after a 220 percent monster run. Constellation Energy, another one tie with some nuclear exposure, some of these high-flying stocks taking a bit of a breather. All righty. Remember, you can always hear us on our podcast. Yes, you can. Be sure to follow and listen to Power Lunch wherever you go. And I do mean wherever. We continue to track Hurricane Milton as it makes landfall in Florida shortly. Power Lunch will be right back. There you see some of the images, one from south of Tampa, the other Fort Myers. Welcome back to Power Lunch and to three stock lunch for a Wednesday. We're going to look at three key movers of the day here

with our trades, Bill Strasullo, Bell Curve Trading. First up, Bill, Labor negotiations for Boeing, on as machinist strike nears its fourth week. No resolution. Sounds like the negotiations have broken off. Plus Boeing ring options for raising cash as the S&P puts Boeing on negative credit watch. Your trade on this beleaguered company. Yeah, Tyler, this is definitely a sale all day long. I mean, still significant financial reputational risk, production risk. I mean, financially every month at the stock or the strike goes on, it's a billion and a half cash burn. Production-wise, you look at the production in 2023 through September. They sold 371 jets.

This year through September, 291 jets. That's a big drop off. And then lastly, reputationalally, there's still a lot of skeptics, myself included, in regards to the product, the management team, the ability to turn this around. So for the people watching the show, you take advantage of any. strength here and fade this. I think Boeing goes down to $120 to $100 a share. So even from here, I think there's a pretty steep drop off going forward. Wow. All right. A bleak outlook there. Yeah. Again, it's something all investors with their exposure to the down and everything should have in

mind. Let's move along to Generac, which is up about 20% in the past month. Of course, a lot of demand for more generator backups because of storm season. The CEO saying pressure on the power grid is only going to get worse from weather and technology. The shares are now about unchanged on the day bill. What would you do here? I think Generax a hold. Look, I generally don't like a name like this because it's got a really lousy chart topped out over 500 in the fall of 2021. Still from that period of time, the average long position is up around 220. So you've got sellers all the way down. People are still in very bad long positions. But the difference between Generac and Boeing is that Generac has a really positive bullish short-term catalyst, and that's the hurricane season.

Bad for us? Good for them. Good for generator sales. And so the stock's trading around 170. I think it goes to 190, 200. You want to hold on to it. There's another 10 to 15 percent of upside here. And then I would fade any move above 200. All right. Very interesting. Let's look finally at Reddit, shall we? Shares are higher today. on a few analyst calls, Jeffrey's initiating coverage, bullish view on ad strength and AI deals, Needham, raising a price target to 85 from 75, maintaining its buy rating.

What's your trade here on Reddit? Definitely a buy, Tyler. Look, the daily account following here is up 27% since the end of 2022. It's consistently one of the top 10 rated websites in terms of visits around the world. So I think it hits all the metrics and it broke out in September of 2024.

I want to buy this name a little bit lower than where it's right now. I buy it 65 to 70 and I think eventually it trades to $100 a share. So this is definitely I think a name that has significant upside going forward. All right, Bill, let's broaden it out a little bit. As we mentioned, the S&P earlier hit that $5790 record high. And you were looking for us to top out. around here. Maybe we run up to 6,000. What's your latest thinking? Yeah, Kelly, we've been as bullish as anybody on the planet here. I've talked about a number

of times on CNBC going back to August 1st, 2023, and then on the show on April 10th of this year, the S&P was 5,160, 6,000. We're going to 5,700, 6,000, and, you know, we basically hit 5,800. So I think the important thing for people watching the show is that there's still a little bit of a bump to the upside. I think this major rally from the lows of March 2020, the pandemic lows, tops out around 6,000. But the most important point here is that we're in the eighth and ninth inning of this game. Classic case of buy the rumor, sell the fact, buy the rumor of the rate cuts, and then sell it to the rate cuts. There's a little bit more to go on the upside, but you should be taking your exposure down, not increasing it.

We're almost done here. So when you say almost done, what does that imply for 2025? I think, once we tap out on these March 20 objectives, 6,000, the S&P, and the NASDAQ 100, somewhere around 22,000, 225, and the Dow, probably 45, 46,000, I think we have our first significant move lower. You know, easily could be something like 15 or 20 percent. The key long-term driver in all these equity markets around the world are the rallies off the early 2020 lows, the pandemic laws. Everybody comes on these shows and says, I'm a long-term investor. If you want to stop an interview and it's tracked, ask them, what's the long-term? The key long-term drivers, the rally off the March 2020 lows, that's almost tapped out across the board.

And I think you're going to see at some point in 2025, you know, your first real significant correction. That's a clear call. Bill, thank you very much. We really always appreciate you having, sharing, excuse me, sharing your opinion with us. Thank you very much. And thank you for watching PowerLine.