Power Lunch - Stock Draft 2024 & TikTok's Live Shopping Push 6/14/24

Episode Date: June 14, 2024

CNBC’s Tyler Mathisen and Kelly Evans take you through the heart of the business day bringing you the latest developments and instant analysis on the stocks and stories driving the day’s agenda. ���Power Lunch” delves into the economy, markets, politics, real estate, media, technology and more. The show sits at the intersection of power and money. “Power Lunch” gives viewers a full plate of CNBC’s award-winning business news coverage, plus a healthy dose of personality from the show’s anchors and the network’s top-notch roster of reporters and digital journalists. 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 Launch, everybody, alongside Kelly Evans. I'm Tyler Matheson. Glad you could join us today. Stocks are lower across the board. Nasdaq going back and forth between green and red. And for the week, the Dow is down more than a half percent. This week, this month, this quarter, the Dow is negative. But the S&P and the NASDAQ are both higher for all of those timeframes. The NASDAQ gaining another 3% this week, driven by Apple and Nvidia. Both of those stocks are up around 8% since Monday, putting their market caps well above. of $3 trillion. But we begin with a couple of controversial figures in the news. Former and maybe future President Trump pitching some novel ideas on taxes. And Elon Musk winning the fight over his pay package, for now at least. We've got Phil LeBow standing by on Tesla, but let's begin with Emily Wilkins. As today is Donald Trump's 78th birthday. Happy birthday to him.

Emily, to you, tell us about what he is thinking about taxes. Well, Tyler, if Trump wins the White House, and honestly, even if he doesn't, key parts of his 2017 tax law are set to expire next year. And Trump has said he wants to extend those cuts and to make them permanent. But he also has some other ideas on ways to raise revenue. At a meeting with House Republicans yesterday, he pitched an all-tariff policy and suggested that it could lead to getting rid of the income tax. Now, let's be clear, a number of economists and tax policy experts were very quick to point out that such a policy would not only shift the tax burden to middle and low income earners, but it would be pretty difficult to implement.

Erica York, a senior economist with the Tax Foundation, tweeted that the government raises about $2 trillion annually from personal taxes. Tariffs raise about $80 billion, but then just look at this larger base. All imports total are about $3.4 trillion. That's not that much high much higher than the tax revenue we get from income tax. And imports, of course, are a much smaller pool than personal income. So it would be very, very difficult to have tariffs just make up everything we are getting from the income tax. And lawmakers I spoke with said, look, our takeaway is that Trump wants to increase tariffs. He wants to look at decreasing personal taxes, that they kind of don't see this as sort of a thing that will happen, but a guide to what they might be able to achieve.

Trump is also looking at some more corporate cuts. Trump told CEOs yesterday at Business Roundtable that he wants to lower the corporate tax rate again, slightly to 20%. It's currently at 21%. Of course, a lot of what Republicans want, they're only going to be able to get done if they take the House and the Senate and the White House this November. And guys, that could potentially happen, but if they don't, they're going to have to really limit some of their ambitions and find the things that can get done in a bipartisan manner. Relying on tariffs to fund a X trillion dollar government seems a little bit impractical, though it was the way we funded the government back in the days of Jefferson and Washington and so forth. Another thought on taxes would be to take away all of the various distinctions about how different types of income are taxed.

In other words, capital gains, carried interest, dividends, interest. some of them are subject to lower rates, some to higher rates. If you tax them all at the same rate, you probably would end up having a lower overall tax rate, wouldn't you, Emily? That could certainly be the case. I mean, the other thing, of course, that lawmakers are trying to get at, taxes are about incentives. They're about trying to incentivize people to do things or not do things or invest in certain ways or grow certain things. And so I think when you take a look at what lawmakers are trying to figure out here, That's certainly playing into it.

You also can't ignore that we are really in campaign season right now. Just the other week, Trump went to Nevada, and he rolled out a pitch on not taxing any sort of income and revenue that people might get from tips. And that's very strategic. Nevada is on the map as a swing state for Trump, but also for the Senate. They've got a key Senate race there. If Sam Brown can wind up, the Republican can wind up taking that seat, it could actually flip the Senate into Republican control. And so that particular policy about not taxing tipped wages, it's something they hope appeals to blue collar workers and maybe makes the difference in a state like Nevada. So I just want to ask, folks on the crew here, would if we want to tips, would you guys tip me at the end of every show so I could avoid?

I'm getting a no here. And how much would they tip? I'm getting a no that they will not tip me. We could have a little Venmo at the bottom of the box. Yeah, send Venmo tips to at Tyler, Mr. Yeah, it'll work. It works for me. Your tip jar.

Lower tax rate. Tip jar right here on the power lunch desk. Emily, thanks. Let's move along to Elon Musk. Tesla shareholders voting to approve his pay package. It's not in tips. Many said he earned it by delivering on his promise. But can he keep delivering?

And how about this big new vision now? Let's bring in Phil Leboe. Phil? Well, he thinks he can deliver, Kelly. And that's why you saw vintage Elon Musk yesterday at the annual meeting where he was riffing for more than an hour. on his vision of Tesla in the future, humanoid robots, AI,

all the advancements that he believes Tesla is on the cusp of achieving. He didn't give a time frame, didn't give any specifics in terms of when we will see actual products roll out. That didn't matter to the people who were focused on the fact that he is in charge of Tesla and will remain in charge of Tesla. But if you were an investor and you're looking for something concrete, a signpost where you can say, okay, here's how the company is doing.

These are three dates to keep in mind, and they're all coming up over the next six to eight weeks. Q2 deliveries on July 2nd. The expectation is not that great at this point. People believe we could actually see another decline. Then you've got Q2 results, which could be challenging in the middle of July, given the slowdown in growth of EVs. And then you've got the Robotaxie unveil on August 8th. So what analysts think about all of Elon's comments yesterday, aside from the hoopla that was out there? Well, Adam Jonas, I think he summed it up the best. He said, shareholder votes are important, but they won't get consumers to buy EVs, speaking to the fact that near-term, it's the electric vehicle business that is going to drive shares of Tesla.

Then you've got Mark Delaney at Goldman Sachs saying, we expect weaker market conditions to weigh on earnings in the near-to-intermediate term. And finally, Dan Levy at Berkeley said the focus now shifts to Tesla's strategy pivot as we await Tesla's Robotaxy Strategy, where a great deal of questions remain. Elon Musk talked about some of his vision for robotaxies yesterday. Here's what he had to say. You can add it to the fleet for a few hours, for a few days, for a few weeks. Whenever you want it back, you can say come back and Carl will come right back. And I'm highly confident that it will far exceed the value, like the revenue made by the owner of the car will far exceed the actual monthly payment.

And then Tesla will obviously take a rev share on that. But most of the money will go to the owner of the car. And this is actually going to work. This is what will happen. So, I mean, mark my words, this is simply a matter of time. The question is when? How far in the future is this actually going to take place according to Elon Musk? As you take a look at shares of Tesla over the last year, and yeah, it's been a challenging

year if you're a Tesla investor, and you just bought like a year ago or so, you're probably saying, where's the run-up? Where's the advancement here? By the way, Elon Musk guy says that he believes the Tesla fleet, because he sees Robotaxy as being Tesla having its own fleet, like an Uber fleet, and then Tesla owners supplementing their income by allowing their vehicles to occasionally join the Tesla Robotaxy fleet, whether for a few hours, few days. That's how he sees it happening in the future, almost like a mobile Airbnb, if you will. Yeah, there's a product out there like that now, isn't there, where people rent their own cars out

to individuals on a short-term basis? Sure, Turo. That's what it is. I didn't want to say the word because I didn't know it. But it's very interesting. But this whole idea of Robotaxies depends on really perfecting does it not, the ability of these cars to be fully autonomous drive and ready for anything that occurs on the road in front of them or behind them? Well, this is where you get into an interesting discussion, Tyler. Right now there's about 40,000 people every year who were killed in automobile accidents in the United States. There is no doubt that as autonomous drive technology advances, that number should come down. It's not going to get down to zero. So the question will ultimately be, whether it's five years from now, 15 years from now, 20 years from now, are we as a society

willing to accept, let's say, 4,000 accidents that cause fatalities if the vehicle computer is at fault? Or are we willing to say, or are we going to say, wait a second, that bothers me. There's a computer here and it made a mistake and somebody died. These are the kind of questions that will ultimately need to be worked up by regulators. So Elon Musk has already said, look, the computer is far better than human drivers. There's no discussion there. Even those who are critical of robotaxies agree that computers will be better than humans. The question becomes, will we be able to accept that some computers, not just, we're talking not just about Tesla, but all autonomous drive technology, you're going to see some fatalities.

And are we as a society and will regulators be willing to accept it? It's a really good point. And, of course, it goes into political discussion. It also is going to bring in the tort bar, the lawyers who will have a big say. And insurance. And insurance. And insurance. In weather and how far and how fast this kind of technology comes online.

Phil LeBoe, thank you. Happy Father's Day. Apple and META could be the first tech companies to face charges under the EU's new tech rules. Steve Kovac joins us with a look at what this could mean for those companies. Steve, start with Apple, I guess. Yeah, let's start with. with Apple because the Financial Times reporting today, the EU has decided Apple is in violation of that new big tech regulations under the law called the Digital Markets Act. Now, we knew this

was coming. Months ago, the EU said it was fielding concerns and looking into whether or not Apple was complying with the DMA. And even though Apple has made many changes for the law, that includes allowing third-party app stores for the first time on the iPhone, it still added new rules and regulations over there in the EU. The big one that people have been against, it's a 50-cent charge against developers for every download over a million from a third-party app store. Now, the Financial Times says the charges against Apple could come in a few weeks, but Apple could still avoid charges if it makes changes soon. And it's already made a number of changes in recent months, kind of in reaction to some of the feedback it's gotten. But if it does

happen and the charges do come through, Apple could be fined up to 10% of its global revenue. That is not nothing. And now let's go over to META real quick. META says it won't be launching its AI chatbot called Meta AI in the EU. It launched a few weeks ago here in the United States. This comes after the Irish privacy regulators requested meta delay training its AI on user data from the European Union. We saw a similar event here last year when META slowed its rollout of the Threads app, that's its Twitter competitor over in the EU, also over privacy regulation concerns.

ended up launching a few months later, though, last December. But what we're seeing here is these regulations going into full effect over in the EU and really causing some of our tech companies to at least slow down a little bit and take a pause and think about how quickly they put stuff out. And then in Apple's case, whether or not they're actually complying with this really meaty law over there. Are these cases likely to produce long-running legal fights? or are we talking about solutions that can be brought to the table pretty quickly by some of these technologies? It's been more of the latter.

So what we've seen Apple do over the last few months after this law went into effect, they've already kind of dialed back some of their more aggressive positions. They've made some changes to that core technology fee that I was talking about. They've made a number of other changes. But they're still fighting some others. And including that big ruling that's separate but related to these EU regulations, Specifically in music streaming, this was from a complaint that Spotify bought. They're fighting that.

They're appealing that decision as well. That was like a $2 billion fine. All right. Steve, thanks very much. Appreciate it. Coming up, retail is facing a bit of an arms race. TikTok is cornering the live shopping market. One brand making a million dollars in sales during a single live stream last weekend.

That success explaining why more and more brands are turning to that platform even instead of Amazon. We'll discuss the implications next. All right. Welcome back to Power Lunch, everybody. What you're seeing right now is the moment beauty consumer brand Canvas Beauty made TikTok history, hitting a million dollars in sales during a single live session. The TikTok global team celebrating with her as she passes the million dollar mark. Last week, the shoppable live stream on TikTok shop not only achieved a million dollars in sales,

but generated 60,000 orders and gained over 25 million views. Gabby Fon Rouge, explain this phenomenon to us. So TikTok is the first company to actually make live shopping work. It's been huge in China for years. In 2023, that market was worth about $647 billion in China. Wow. And the U.S., 50 billion. So drop in the bucket, not that much.

But TikTok has done something that all these other companies haven't been able to do. Amazon Live has tried shopping, eBay, curate the QVC parent company. everyone has tried live shopping as well as these smaller startups, but it hasn't been able to take off. And the reason why it's working so well on TikTok, according to some of the sources that I've spoken to, is because it's fusing social media, entertainment, and shopping. You are on TikTok because you want to look at great videos.

You're there for entertainment. And then as you're scrolling, one of your favorite influencers, oh, what's this interesting ice maker? Or what's this interesting beauty brand that I haven't heard of? And then in two clicks, it's in your cart and come into your house. less friction. They're like an Instagram live event, basically. It's not like when I'm scrolling down and I see a sort of static ad for a pair of men's shorts or a pair of shoes or a Movato watch or something like that. This is a program like HSN or QVC, right? It's exactly like

HSN and QVC, except that you can interact too, which is also what's making it so exciting, and it's really landing with the Gen Z consumer, that younger shopper. You have the ability to comment, And oftentimes the creator is going to be responding to your questions in the middle of the stream. Let's say you're shopping for new apparel or a new shirt and you've got somebody that's showing off this new blouse. And then I can comment and say, can you show that from another angle? How would that work on a size medium or a size six? So it's a completely different than just an ad. It's an engaging community building kind of experience.

We have a little surprise. Yeah. Stormy Steel herself, the Canvas Beauty brand, see who we just mentioned, is going to join us. Stormy, are you there? Yes, I'm here. How are you? Congratulations. Thank you so much.

I really appreciate it. What was your previous high watermark for sales? It was honestly on a single TikTok Live. I think we set the first record. It was about $350,000 contributed to the live. Wow. So how did it work like Gabby's describing? Were people literally, were you getting and able to check those messages as they were coming in

and kind of show people what they wanted to see in real time? We were. And just recently, we broke our previous. record. So just recently we did a million dollars in sales in a single life. In a single thing. How long was this TikTok live event open? We were on for about five hours. Five hours? Wow. Yeah. Oh, well, we should just keep a power lunch going for five hours, see if we could do it. I mean, that takes a little bit of stamina. So what you sell are, um, explain what you sell, basically.

They're beauty products of, uh, and fragrances of various sorts, right? Yeah, so our hero product is called Body Blaze. When we got on TikTok shop, it was an industry disruptor, and it totally took TikTok shop by Storm, no pun intended. And it just went viral last year in August, and we have been on a high ever since, and the product isn't going anywhere. It's amazing.

Gabby, what do you think? As people see the success, should we expect Amazon and Instagram and all the rest of them to kind of jump in and try to follow suit? Well, that's why Stormy's product was so successful is because TikTok has that virality of it. It's something where you're watching a video and communities get behind it,

and that's how it's able to grow and scale so fast. So what we're hearing from a lot of these CPG companies is that they would rather, especially newer brands upstart, such as Stormy's company, they're going to TikTok because you can scale like that. If you're trying to do that on Amazon, it's going to take you far longer. You've got to play the, you know,

make an offering to the SEO gods. You've got to pay for the boosted search. You're competing against your own, manufacturers and five other people that might have counterfeits of your product. So it's far more competitive. And so young upstars, Stormy was able to do this just by yourself by opening an account. That's huge. And that's where shoppers want those new hot brands.

And they're on TikTok. Who handles sort of your back office affairs, Stormy? In other words, payments and so forth. How does that get done? And I assume that TikTok collects some toll of revenues, right? So basically, when you have a TikTok shop, all of your transactions are actually done through the TikTok shop and their platform. So all of that is coming through their platform. They have something, you know, very similar to, you know, any other e-commerce brands, like a Shopify, etc.

But all of that is housed by TikTok once you open your TikTok shop. Stormy, do you worry they're going to ban TikTok? Of course. It's always like at the top of mind. And I would hate if they did such a thing because TikTok is one of those platforms. To me, it's for the American dream. Like, our story is truly a story of the American dream. You know, you get on social media, you have this vision, you have this dream, you have

this platform that actually helps you reach consumers. And it's all based off your personality, just what you share. It's truly authentic and it's truly lofi and raw. And you can't really get that anywhere else. And I would truly hate to see TikTok go. I think it would crush a lot of people's American dream. And I don't think that's right. We're showing here a little bit of sort of the moment again.

Did you go to a studio to film this? How did this work? Did TikTok help you set this up? So our very first TikTok live was actually filmed at TikTok Studios. That's when we set a record of $350,000. And then just recently we broke that record by doing $1 million. And we did that here in Alabama at our warehouse. Wow.

So that's what I think I need someone waving that sign behind me, a little hand, a cheer hand behind me. Just gin up excitement about the show. So then you now could just do this however often you wanted. When do you think you'll do another one? We have another one plan next month. It's going to be for my birthday sale, so I'm really excited about that, and hopefully we can break our record again.

Wow. Where do you source your products? Where do they come from? We make our products in-house and our own facility in Alabama. Interesting. Wow. Stormy, thanks for being with us. Stormy Steele.

Appreciate it. Thank you so much. I really appreciate it. Keep up the good work. All right. Thank you. Gabby, thank you as well. Gabby, thank you.

Thank you. Further ahead, multi-million dollar coastal homes are falling into the ocean. And it's leading to a staggering drop in home values. When it goes into the ocean, it does tend to affect the value negatively. We'll take a look at the rising risks from rising tides when we return. Welcome back to Power Launch, everybody. Let's check on stocks right now. The industrials are down about a third of a percent or 114 points.

They were much lower earlier in the session. S&P 500 essentially flat, as is NASDAQ, though it is. slightly in positive territory bond yields also falling rather dramatically we hit 4.2 on the 10 year let's bring in rick santelli to talk a little more about that hey right hi tyler indeed you know this morning we in university michigan sentiment what was interesting here is not only did confidence drop but counterintuitively inflation metrics rose now it is a survey a little more qualitative than some of our data this week but worth paying attention to and as for our what Tyler pointed out, we're only a couple of basis points lower on the day. It's on the week.

Look at a one week of tenure. As it currently sits at 421 yield, it's down 22 basis points on the week. Tos are down 20 basis points on the week. And as you open that chart up towards the end of March for tens, we haven't seen these closing levels since the end of March two and a half months. And the dollar index in a counterintuitive fashion as well seems to be doing. doing more to the upside on the relative value currency trade because it's on pace for the highest close in five weeks. Now, we know that next week we do have one day that's a holiday, but we also have retail sales. And many, of course, analysts and sources of mine think that will be quite an important number given some of the more confusing metrics. But one thing's for sure

this week, some of the inflation numbers outside of Michigan definitely eased back, especially on a month-over-month basis. Kelly, back to you. Rick Santelli. Natural gas prices are down today and down 60% in two years, meanwhile, but that doesn't necessarily translate to utility savings yet. Pippa Stevens is here to explain. What's going on, Pipa? Yeah, so consumers should not expect any type of relief this summer on their electric utility bill. They're actually forecast to go up by 8%. And so even though Nat gas is under $3, you have to remember that the fuel cost is only one part of your utility bill. The other side is the things like the wires, the transmission, all of that, all that that costs money

actually get that power to your home. And that's the portion of the bill that the utilities allow to earn a regulated return on. So you see here we have this graphic. So on that blue line, you can see that electricity prices have been going higher. And in the last five years, they're up about 19 percent on an annual basis from 1385 in 2019 to about 1642 last year. So there's definitely some sticker shock there. However, if you look at the orange line, that's when you adjust for inflation. So looking at that, it's actually come down a little bit. However, the latest CPI report this week showed that in May, electricity was actually outpacing overall inflation up 5.9%

compared to 3.3 on CPI overall. And that really rarely happens. And part of that is because a lot of the rate hikes were delayed coming out of the pandemic. And then we had that big spike in fuel costs after Russia invaded. And those are all passed through costs. But the utility doesn't want to give that to you all at once. And so a lot of consumers across the country are still paying for that. What do people say about the ultimate, over the next decade trajectory of electric prices,

given that we're using more devices all the time, given that there are all these high demand installations, the data centers and so. Given that we're going to charge more cars, no matter what or... And are the companies going to be able to keep up with demand, or are they going to have to price their product much higher? Well, I think one thing is that the portion of your wallet, the spend towards electricity is definitely going to go up. If you switch to two EVs from two ice cars, your gas costs, of course, go down,

but your electricity is going to go up. And so you'll definitely be spending more on that. I think on the actual demand front, I think that still remains to be seen. I mean, we're now seeing projections of just how much data centers are going to require. And nobody really knows at this point. I think that's one of the hard things. It's really hard to forecast looking beyond 2030. However, I think the basis is that we are definitely going to see this big increase in demand,

and we have to build a lot more generation to meet up. And then also make sure we maximize our existing infrastructure. We can do things like, you know, replace voltage lines so that they're higher voltage, you know, things like that quick fixes that some people say that utilities are not fast enough to do simply because they earn a higher rate of return on that new generation. Yes. So it's very confusing to try to, you know, figure out how do you make sure, yeah, and how to make sure the costs. Very complicated industry, obviously.

and government regulation of some rates makes it even more complicated. Pippa, thank you. Let's get to Bertha Coombs. CNBC News Update, Bertha. Tyler, the GOP-controlled House today passed the National Defense Authorization Act, which includes provisions targeting abortion and diversity, equity, and inclusion initiatives at the Pentagon. The final bill will require compromise with the Senate, though,

and Democrats on the other side of the Capitol called this version, dead on arrival. The National Transportation Safety Board opened a probe today into a Southwest Airlines flight on a Boeing 737 max in May that experienced a so-called Dutch roll. That's when the tail slides and the plane rocks from wingtip to wingtip.

According to the FAA, there were no injuries and pilots did regain control, but the plane did suffer substantial damage. And Kate, the pretext, the pretext, Princess of Wales or Catherine, the Princess of Wales, is set to make a public appearance for the first time since revealing her unspecified cancer diagnosis earlier this year. In a written message released today along with this new photo, the princess says she's still undergoing treatment, has good days and bad, but will attend the trooping of color on Saturday, part of a celebration of the birthday of King Charles. She also says that she's grappling with being patient with uncertainty, something a lot of us know when you deal with these kinds of illnesses.

Back over to you. Very true. Thank you very much, Berth. Coming up, while tech has been soaring, we've seen weakness in the industrial space. We'll discuss that and maybe a few other things. Three Stock Lunch is coming up. It's time for today's three-stock lunch. Our trader is Brian Vendig of MJP Wealth Advisors.

Brian, welcome. First up, today, Adobe shares soaring, posting their biggest gain in more than four years on better than expected results. There's an AI angle here, of course. Brian, with the shares up nearly 15 percent. Now, are you a buyer here? Hi, Kelly. Yes. Actually, it was really encouraged by the Erring's report that came out recently and talking about second half demand and subscriber growth, potentially improving due to, as you said, the AI improvements in software adoption. And so, look, the stock's been down 23% through last night's closed and with hearing that here's a company that is looking at an annuity stream with its business with subscriptions as an alternative to that AI story, which is, as we know, has been primarily chips and servers. I like that, you know, right now, based on what the company's been saying and what their outlook is for the balance of the year.

All right. Sticking with it. All right. Let's move on to Caterpillar. A broader weakness in industrials. Caterpillar helping to lead the Dow's losses today. Your trade on the Big Cat. Well, on the Big Cat, Tyler, you've got to be diversified.

And I think this is a great name when thinking about what can happen with the global economy from a cyclical perspective. I mean, fundamentally, the company has been sound, very affordable and a forward price to earnings ratio around 15, and talking about a stable business in light of a slower-growing growing economy. And I think if you believe in the thesis of interest rates declining as inflation declines as we move into the balance of this year into next year, Caterpillar definitely can get a boost from lower rates being in a capital-intense business. And also the fact, we still have another almost decade in front of us of infrastructure spending with China

stabilizing. At these valuations, that's something that looks attractive to me. All right. Caterpillar, let's move. move along to Hasbro shares then, which are hired today on an upgrade from Bank of America, they're talking about expectations of an earnings rebound, oh yes, from its digital gaming strategy. Let's talk Hasbro. Would you buy the stock here? Well, Kelly, I would say let's take our money and run when we pass go, so to speak, a little monopoly reference there. I think today's bounce really came from an analyst upgrade, to be honest to you, not necessarily durability from the fundamentals of the company.

I mean, just a couple months ago, the company was talking about sales being at risk of decline or not growing as much as expectation. Plus, we know that this type of business is sensitive to consumer spending. And in light of some of the macroeconomic things going on, when consumers have shown to be sensitive on price and maybe in the short term a little bit more sensitive this year than last year, I got to say Hasbro being in the consumer's product space might be sensitive to those demand shifts. So I would, again, put a sell on this one. Let's take our money and run as we pass go and see how things play off for the company over the balance of the year.

All right. Brian, thanks for your time today. We appreciate it. All right. He's still to come. The rising risks facing coastal real estate, how rising sea levels are sinking home values. Hurricane season is upon us and the forecast is for above average activity this year, up to 13 hurricanes. This, in addition to sea level rise, has coastal real estate seeing flooding and erosion like never before. We've reported on the potential hit to real estate values, but it is now happening right in front of us at a faster pace than most people expected. Diana Oleg shows us in her continuing series on the rising risks from climate change. From Dana Point, California to Long Island, New York, to Nantucket, Massachusetts, some of the nation's priciest coastal real estate is in an increasingly precarious position due to climate change.

They're buying them knowing they're going to lose them. This Nantucket home was listed last summer for just over $2 million. But in the fall, a barely notable Nor'Easter wiped away an astounding 70 feet of the beach it sits on, thanks to sea level rise and unusually intense rainfall. The house sold this year for just $600,000. The buyer told the Boston Globe, the price mitigates the risk, and it's not the only one. There's been several. One sold in the mid-sevenths and one sold in the mid-eighths, which I know that sounds like a lot of money.

But those houses, if they weren't at erosion risk, would have sold for, I don't know, 10, 12 million. Nantucket real estate agent Shelley Lockwood just launched a seminar for fellow agents to help them reprice homes at risk. I saw houses selling and I thought, oh my God, that's not worth that. It's falling in the ocean. On the eastern end of Long Island in Montauk, back-to-back storms this winter had the community scrambling to bolster its beaches and protect its multi-million dollar homes as the water came in faster than ever before. Where we've seen flooding in the past and the water subsiding right away, it's not subsiding anymore. We have a friend that has a $10 million home. and he's not even sure what to do with it because if he sells it, it's never going to be the

$10 million that he bought it for. Looking at zip codes just on the East and Gulf Coasts of the U.S., these 33 have a median home value of at least $1 million. And in just these areas, a combined 77,000 properties are at significant flood risk, according to models by First Street, a climate risk data and analytics firm. That is roughly $100 billion in potential losses. I think we just put our head in the sand. Values weren't going down until the last 10 years,

and it's still been kind of a quiet reduction. Attorney Chris Farley is working with Nantucket homeowners to help reduce their property taxes as both the beach and their values erode. Some homes have been reassessed while their neighbors haven't. This house behind me, for example, is $2.2 million, but the house two doors down is half a million dollars for their land value. And the house on the other side of that is 250,000.

All three homes sit on the same cliff that is quickly losing ground. In the last six months, this has eroded, I would say, 12, 15 feet of sand is gone. And these protective tubes, so we're not supposed to be seeing this. This should have been covered. On one beach, it's erosion. On another, the rising ocean has pushed sand. so far as to bury the homes. This was not like this last fall.

This has happened this quickly. All this sand coming up here like a snowdew. See that, that was their septic. These things are not usable anymore. Once utility wires and septic systems get exposed, the town has to condemn the property. Homeowner John Conforty watched our interview from his front steps.

He's owned his home for 42 years. We all say one more year. Without beach erosion, how much would John's home sell for? Right now, if it wasn't at Roeastern, risk to five and now I don't know if you could sell it maybe five maybe 500 maybe but you'd have to have some buyer willing to lose it as more and more homes lose value and see their property taxes reduced the local economies could take a hit meaning taxes for everyone else could then go up nantucket residents are voting on which parts of the island need the most help and

who will pay for it while in montauk experts are reassessing coastal resilience plans made nearly a decade ago after Superstorm Sandy because they're already outdated due to climate change. That's you guys. Diana, this was really eye-opening. And to see properties where they just really can't reclaim any value, have they talked about trying to do things like build out the beaches and add more sand? I mean, I know it sounds crazy and expensive, but for that kind of loss, even on the tax revenue that you described, you think towns might want to be coming up with something. Yeah, I mean, there's all kinds of mitigation going on. You saw those enormous geotubes and you see sandbags and you see them moving.

the sand all over the place, and that costs millions of dollars to do. And the problem is that as fast as they do it, the ocean just comes in and takes it away. Wow. Wow. Diana, thanks very much. We appreciate it. Our Diana Oleg. Coming up, competition remains strong in the CNBC stock draft. New leaders constantly emerging.

We'll get you the very latest when we return. All right. Welcome back. Time for a quick power check. On the positive side and how is Adobe surpassing expectations on earnings and revenue, up 14% for the day, $66 a share. Negative Carnival Corporation, some new pricing worries from a Bank of America report, saying cruise ticket fares are going to start to fall. That's your power check.

And remember, you can always hear us on our podcast. Be sure to follow and listen to Power Lunch wherever you go. We'll be right back. Welcome back to Power Lunch, everybody. The Dow is down just about as well 75 points or thereabouts, lower for the week as well, but S&P 500 and NASDAQ, both higher for the week. Thanks in part to Apple, which is up 7% this week alone following its worldwide developers conference results. And it's now neck and neck with Microsoft and Nvidia for the market cap lead.

There you see Apple and Microsoft really, really close. And on Monday show, we've got a three-way bullfight, three analysts, three trillion-dollar companies to talk about. We've got your Apple, your Nvidia, and your Microsoft, which is the best bet to get to $4 trillion? We've got folks who are willing to make their case. And those big gains for big tech have propelled Steady Eddie George, Steady Eddie into first place in our stock draft. He's up more than 40% since the draft on April 25th. Thanks to Nvidia and Apple, his two choices. In second place is Neve Schumann, Market Fish, who went with a footwear strategy, taking bootproof.

barn and crox. Third place, O's Perlman, who took big gambols on Bitcoin and Carvana. He was in the lead early, but has given it up now to steady Eddie George, who joins us now. Hi, Eddie, how are you? Good to have you with us. Hey, I'm great to have to look at those standards. I feel really good right about now. You should feel good.

And, you know, Invidia has just been a juggernaut for the past couple of years. and Apple has come back and now trading near all-time highs. I mean, you really couldn't have expected to go two-for-two that way. Well, you know what? Going into the draft, I felt really good about my opportunity. I picked second overall. I think the first team took meta and left Invidia sitting right there, and I felt really good about it.

And let me just say this. You know, I've been in the business, the wealth management business now for almost a decade, partner with Mayor Price, who's our broker-dealer. I got my master's in business in 2009 from the Kellogg School of Management at Northwestern. I have asked my business partner has been in the business for 30 years. So we've teamed up, really put our heads together and we're trying to figure out what was the best opportunities here. We really felt really good about Nvidia.

Clearly, you could pull up, look at CNBC, look at Google, look at all the news of what they've been able to do. And certainly with Apple, with their, with their, their products that are coming out with AI and how is this exploding. I mean, it's just been the perfect time for us to jump on that. And I feel really good about our positions. But more importantly, the two companies led by two great leaders, has been phenomenal. Well, that's absolutely true. And I must say it's really great to see a guy like you have a second act that's just as good,

maybe even better than the first. I mean, congratulations on that. Thank you. Let's talk a little bit about Eddie George, the wealth manager, apart from making good picks in a stock draft, which is kind of a fun competition, how would you describe your investment strategy? What do you look for? We look for value opportunities for our clients. You know, it's really according to what their goals and objectives are.

It's never been about getting a commission for us or what's best for Edward George in terms of our commissions. It's been what's good for our clients. So it's really about our four pillars, the transparency in terms of us being transparent as far as our operations and how that goes, the intimacy. You know, we don't deal with a lot of clients. We deal with high net worth individuals, billionaires, athletes, current and retired athletes, which also leads to trust and we all, you know, operate with a high level of integrity. So we're always looking for those value picks, those opportunities,

that we can say, okay, how can we make our clients the best money according to their goals and objectives? We've got about 45 seconds left. I am ready for some football, Eddie. I'm missing it. I'm ready for it to be here. Me too, Tyler. I am to get you. I am saying right here right now, the Ohio State University is going to be the number one team in the country this year. I agree. You know, I'm the head coach at Tennessee State. I would like to say that we are going to be the number one team in the country. But based off of with Ryan Day, and their staff has been able to do over the course of this year, really put together a great roster. The quarterback position is going to look a little bit different than it has in the past,

but I think the addition of Chip Kelly, their offensive coordinator, who was the former coach at UCLA, is going to bring a run game that's going to be powerful. It's going to be something we're used to seeing. So I like their chances to possibly win a national championship for being a hunt for it this year. Got to leave it all.

Eddie George, thanks, and thank you for watching Power Lunch. Happy Father's Day, everybody. See him, Hyundai. Thank you.