Power Lunch - Stocks climb to start November as Wall St. looks past weak jobs report 11/01/24

Episode Date: November 1, 2024

Stocks are rallying to kick off November, as Amazon led big tech stocks into the green and traders looked past a disappointing jobs report this morning. 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 Lunch. As long as I'm Kelly Evans. Back from trick-or-treating, yeah? Limping back. Limping back from trick-or-treating. I'm Tyler Maths, and glad you could join us. Market's shaking off a disappointing jobs report for last month. Only 12,000 jobs created in October.

That's the weakest jobs growth since December of 2020. But the Dow is up more than 300 points right now. That jobs number obviously had a lot of sort of soup in it with the strikes at Boeing and other things that were at play. Sure, big storm factor. The interesting thing is if you say, well, the market's up because there's better odds of a rate cut now, but wait a minute, no, those are one-off factors. So should there be odds? Let's hope it's Goldilocks, which is the economy is still not recessing, inflation's still coming down, we're still expanding. That's how you get a ticket to higher stock price.

And the unemployment rate stayed basically steady. Exactly. The participation rate basically steady. Indeed. Here we go. The NASDAQ rebounding from yesterday, sell-off with Amazon leading the way. That's helping today as well. It's still up 6% on earnings.

Operating income was much better than expected, despite spending billions on AI. Apple shares meantime tied, they're usually more of the bellwether here or the barometer. They're down one and a half percent. Yeah, I mean, Apple often sells off after earnings and no exception here. But obviously Apple will be one to watch for the rest of the year. And we've got an exclusive interview with the CEO of Roblox. The street reacted positively to its results. But still a lot of concerns about the company, specifically some men.

made in a Hindenburg Investments short-selling report that accused the company basically of not prioritizing safety for children and secondly for inflating some of the user metrics. We'll talk about that with the CEO. Yep, we will. We start with the weaker-than-expected job support, the payrolls showing falling well short of estimates. Two major hurricanes and that Boeing strike are having a big impact. The unemployment rate is staying just over 4%. Let's get some reaction now from Michael Faroley.

He's the chief U.S. economist at J.P. Morgan. Mike, it's great to see you. And how would you, what for you is the most important signal to separate from all of the noise in today's report? Well, I mean, you're right. There's a lot of noise in today's report. I think you mentioned the unemployment rate, which held steady or to higher precision. It edged up a little bit. That probably isn't as influenced by either the strikes or the hurricane.

So I think that part of the number and everything basically relating to what we call the household survey is probably a little more reliable. It may have been, you know, just a touch on the soft side, but nothing to get too worried about. So I do think it probably fits in with that sort of Goldilocks narrative, you alluded to earlier, that in conjunction with what we saw earlier this week, with job openings and with employment costs are kind of suggesting a pretty soft landing. And, you know, a labor market that's probably coming into balance,

but not cooling in a manner. that's worrisome so far. So overall, again, a lot of distortions, a lot of, you know, squinting you have to do to kind of see what's, you know, what's really in this number. But overall, we think it's still a pretty favorable story. But in other words, even though we added only 12,000 jobs last month, you think we're not in danger of the economy slowing down precipitously. We're not in danger of seeing now a turn towards layoffs at a mass scale or anything like that. No, I don't think so. I mean, we know pretty well that at least 40,000, of that disappointment was due to strikes, if not more.

There probably was summer hurricane effect. We'll know in a couple weeks when we get the geographic data, but certainly what we're seeing in jobless claims, you know, just yesterday suggests, you know, we're not hitting an air pocket in-job growth. So that headline number of 12,000, you know, we don't know if it's being held down by 50,000, by 150,000, but it's almost certainly weaker than the,

than the, you know, the truth out there in terms of actual job growth. So a variety of other indicators would suggest that that's, you know, that we can kind of set that, you know, put an asterisk next to that and still have a pretty favorable, I guess a pretty favorable view. The consensus notion is that the Fed will cut interest rates by a quarter point on Wednesday. Is there anything in this report that would change your view of being, of going along with that consensus? No. You know, look, I think before the Fed went into their blackout period this week, you know,

what they were saying was pretty consistent with a cut next week of 25 basis points. It's actually on Thursday. And then, you know, most of the data we saw this week, again, not just, not only today's report, but also earlier what we saw with job openings, what we saw with, you know, the employment cost numbers. I think that's all consistent with, you know, as they've been pointing out, labor. Inflation's come down quite a bit. Labor market's coming into a better balance with perhaps, you know, still a little smidge of a downside risk to labor market. So in that environment, maybe, you know, we think it still makes sense to get back closer to neutral,

which is, you know, the way the Fed's been talking about it before they went quiet. And so we have no reason to think what we saw this week should change their opinion in that regard. Mike, what do you think about the Fed now? We're pretty much fully priced in for a quarter point cut. Jim Bianco last hour said it's unnecessary. kind of because of these comments about how the economy is doing and look at stocks at all-time highs. Do you think they'll go a quarter? Do you think they'll keep going a quarter? So I think they'll go a quarter next week, as we discussed. I think they probably go another quarter in December. I think as we get out into next year, they may, you know, they may step down the pace in part because we would be getting back closer to neutral.

And also we'll probably have more uncertainties. We could have more uncertainties in terms of fiscal policy. and other things that may cause them to be a little more cautious. But for now, I think continuing to modestly, you know, correct policy back toward neutral makes sense. You know, but I think in part some of the financial conditions you mention are reflecting some of the things the Fed is seeing, which is that some of the adverse supply shocks, which were driving inflation higher, you know, are receding.

So it makes sense in that environment that, you know, risky assets would do well. and that also that the Fed would be, you know, getting back on sides in terms of policy rates. What are you looking forward to for the economy in 2025, no matter who is president and no matter who controls Congress? Well, I mean, certainly the jumping off point in late 24 is looking pretty favorable. You know, inflation's down quite a bit. We're not back to 2%, but, you know, we're getting close. The labor market's in pretty good conditions.

And so I think, you know, if the Fed has a little scope here to ease further, I think that could, you know, take out or limit some of those downside risks. So we think we're probably looking at a, you know, right now a pretty soft landing, though, you know, with either outcome for the election, I think the policy, the fan of uncertainty widens out as we get into next year and certainly until late next year when we have a lot of fiscal policy decisions that either candidate or, or, you know, whichever party has Congress will have to contend with.

So that definitely makes things a little more murky as we get to late next year. Michael, thanks so much. Have a great weekend, sir. Thank you. You too. Michael Faroli joining us today from J.P. Morgan. Today's disappointing jobs report coming only a few days before Election Day, and that makes this number potentially a big political issue.

Let's bring in Aymond Javvers for the Washington reaction. What is it, Amon? Potentially, yes, Tyler. But look, this is perhaps the most politicized. but maybe the least politically significant jobs report of the year. And here's what I mean by that. Just days out from a presidential election, the disappointing jobs report was instantly swept up in this maelstrom of political commentary on TV and online.

But because we're just two business days away from the election now, there's just not enough time for this particular number to have much political impact on the election. For their part, the White House, they were eager to put the number in context, arguing that the devastating hurricanes and strikes that we saw in October mean that the that this month's data is just an outlier. The White House released a statement from President Biden saying job growth is expected to rebound in November as our hurricane recovery and rebuilding efforts continue.

And Council of Economic Advisors Chair, Jared Bernstein, emphasized just how temporary he considers this data to be. We know that there were two powerful forces leading to negative and temporary impacts on payroll growth. Those were, of course, the hurricanes, that really hit the southeastern United States, wide swaths therein, and the strikes. And if you account for those factors, the underlying pace of payroll job growth is still healthy, probably in the 150,000 range.

Now you heard Jared really punched that word temporary in that soundbite. That's the message from the White House. But the Trump campaign was eager to exploit the weak number, releasing a statement from a press spokeswoman, saying, this jobs report is a catastrophic. and definitively reveals how badly Kamala Harris broke our economy. So the reaction to this report just as divided, Tyler, as America itself as we head into election week next week. Back over to you. All right. Very interesting.

Amon. Thanks very much. Amon Jabez. You back. You're back. You back. You back. The 10-year yield rising back above 4.3 percent. Now look at that tie.

It's at almost 436. So we've done a round trip and then some after that week jobs report. Let's get to Rick Santelli in Chicago. to break it all down. Rick, what do you see? Well, first of all, the market did a major U-turn, as you pointed out. And let's consider, as you look at the intraday chart, how quickly it went down. Well, it didn't really go down very much, though. And if you look at a two-day chart, very important here, Kelly,

well, not only do a U-turn, we traded higher, we've extended this move. We're on pace for a four-month high-yield close. And if you look at a couple of days in front of the September jobs report, released in early October on the left side of that chart, you can see how much we increased. When I was doing the numbers and I saw how little kickback the market gave on what was perceived to be a weak report, I knew something was wrong. People are asking, well, what's going on with the markets and the report? Here's an easy answer. Not only is it noisy, how accurate is it? Consider, before the revisions, August and Sepp had a cumulative total non-farm of 413,000.

Now, 301,000, nearly a 30% revision. Who's going to pay attention to any of these numbers? When the Bureau of Labor Statistics tells us how much hurricane influence there was and there wasn't, how can we trust that? They have no idea about seasonality. These numbers aren't very good. The argument is they've never been very good, but the market has never been under the thumb of so much government control.

That's why it means so much more and why investors scrounge for, every little data point and consider next week. We have an election. We have $125 billion in supply, which could have been another reason the markets you turn. We have $58 billion threes, $42 billion tens, $25 billion, 30s, a delayed meeting by the Fed by a day because of the election. And of course, we're going to have a Fed meeting, all crammed into one week

after what is perceived to be a weird report. I would trust the market's interpretation, and all your left would, if you don't trust that, is it has to be looking at debt and deficits. So no matter where you look, you could talk about soft landing all day long. If you need credit or you even remotely look at how much the service of debts costing, you would question the whole notion of a soft landing. Tyler, back to you. Let me follow up with a question.

You mentioned very interestingly the idea that maybe the numbers have never been very good. And, in fact, I think you stated that, have the numbers not only never been very good, but has the variability, in other words, the size and frequency of these revisions gotten greater in recent years? I think they have gotten a bit greater in recent years, and I think part of that is the whole process of how you gather information from the public in general. I question anybody that answers their telephone for a number that's not in it or talks to somebody who knocks on their front door. I just think that we need to do a lot of revamping and how we measure the economy at a time where the Fed presence in its balance sheet is still by historic standards crazy big. Yeah, it's very interesting. It goes to the question of polling as well. In other words, polls typically call people on landlines or go knocking on doors. And you get a certain kind of person who's willing to participate in those sorts of surveys and many others who are just not willing to do it.

so it does call into question the methodology. Rick Santelli, have a great weekend. All right, big tech pulling the curtain back on AI spending, and it is a lot. Some companies like Alphabet indicating costs may have to be cut once again, but workers aren't happy with the vague message, and they are letting management know they don't want any more tricks in their Halloween back. The details further ahead. Welcome back to Power Lunch.

Despite a messy October jobs report, it seems that investors are looking at past it as stocks are rising to start November. Can you believe it's November 1st? My goodness. The Dow jumping 500 points. S&P and NASDAQ up more than 1%. The Dow right now is up 264. But the major average is still ending on a bit of a choppy note for the week as the S&P and NASDAQ were pulled lower, disappointing earnings from META and Microsoft. There you see, week to date in real time. Here to discuss it all and more. Keith Lerner, co-chief investment officer at Truest Wealth. Keith, welcome. Good to have you. with us. This has been a very good year by any standard, up more than 20% for the first 10 months

of the year. It is one of the best election years since the 1950s. Does good performance tend to beget good performance, either for the remainder of this year or into next? Yeah, well, first, Tyler and Kelly are always great to be with you. And just looking as a starting point to your question around the data, typically when you have a strong first 10 months and We're over 15% in any year. The final two months of the year, you are up 95% of the time, 19 out of 20 times. So the history is on your side. And then also, let's say if we just look at election years themselves, you typically up about

78% of the time with an average gain of about 3%. That's a starting point. I think Warren Buffett said if all you needed was history, the richest people would be librarians. But I think the main thing that you take from that is that a market that or a trend in motion tends to continue. And even if we get some of this volatility around the election and some of the other major events last, next week, the primary trend in our work is still pointing higher over time. So history says one thing. What could screw it up? Well, what could screw it up? I would say, using history as a guide, normally you have a little bit of a pre-election pullback, and you haven't

seen that. So what normally happens is you have that pre-election pullback. It's overdone because is based on anxiety. And then whoever, once you get past the election, whoever wins, the market tends to have a sigh of a relief. Well, this time you've never had that dip to kind of rebound from. So I think that could screw it up. I think also, I think there's just been so close of a race that investors are almost not, even though there's so much talk about it, investors have been looking through it.

So when you actually get some details of what's going to happen, I think that can maybe have a jolt of volatility. But all in all, Tyler, I still think the more important thing is the direction of the economy. the direction of earnings, and outwork, that's still positive. But again, you might have a jolt of volatility over the next week or two. We've been bucking some trends here in the last couple of months, Keith. First of all, September wasn't negative for the first time in like five years, and we had plenty of pretty bad ones before that.

Then October, it's always supposed to be markets are weak going into an election. Instead, they were pretty strong, notwithstanding the way we finished there. You're a little bit worried about kind of a buy-the-room or sell-the-fact outcome come Tuesday? Yeah, well, that's on a very short-term basis. I think that is, you know, at no all-time highs, a little bit of optimism. So I think that could be it. But for our investor base, you know, we're not looking for the next week or two. We're investing typically for many years, but our tactical time frame is typically, you know,

six months to 36 months. So the way we're looking at is I still want to stick with the primary trend, which we think is higher. If we get a pullback on the other side of that and we think it's just because of some of the uncertainty around the election outcome, we would use that as an opportunity. Because our work strongly projects that elections matter. but other factors tend to matter more in aggregate. And again, the underlying foundation of earnings in the economy is still in our favor. One of the things you mentioned a moment ago was the idea that post-election,

the markets tend to heave a sigh of relief because they know who the winner is. In this case, we may not know who the winner is for several days, maybe even several weeks. It may be contested. And so there could be a period of unknowing. And that's, in my view, a non-trivial chance. What would that do to the market? Well, the broker won't like that initially, right? Because it's uncertainty.

And we have seen this before we saw this around, you know, hanging chads back in 2000. But our work also suggests whatever the prior trend going into the election, that's likely to be the direction after you get through that short-term uncertainty. So I think, you know, investors are going to have to, you know, kind of buckle up. It's going to be a challenge on a short-term basis. But again, we're going to get through this. It may be a couple of days. It may be a couple of weeks.

It likely won't be a couple of months, and it certainly won't be a couple of years. So, again, I think as we get through this. Let us hope it's not a couple of years. Let me just close by getting your quick perspectives. Give me three sectors you love and two you do not. Okay. Well, we still like tech. I know it's more divergent, so we still think the AI cycle has room.

It's going to have some money. Right. Financials. We're still a little bit of the economy doing well and credit holding up. We think that's the second. And a third, a bit of a hedge and also an AI play is utilities. And ones you don't like? The two that we are underweight currently are consumer staples, which in a strong economy, I don't think people are going to pay up for that. And then also energy. I think energy prices are probably somewhat range bound and relative price trends remain weak. Keith, thank you very much. Keith Lerner from Truest Wealth, co-chief investment officer there. Thank you. very much, Keith. Have a good weekend. Thank you. And still to come, first we'll explore the geopolitical risks facing oil giants Chevron and Exxon in Market Navigator. Further ahead, the trades on Apple, Amazon, and Tesla in three-stock lunch. Oh, yes, there's a lot coming up. We'll be right back. Oh, yes. Oh, yes. Yeah. Okay. John and I have been a really good conversation. Yeah, of course. We'll listen on a little of it later. Sure. They're the industrials up. Look at that. They're higher. 325 points. A quick check on the markets. The S&P up.

by about a half percent, and the NASDAQ by about a tenths of one percent. So what is in today's market navigator, Mr. Magellan? Well, we're going to navigate around what's happening right now with the oil and gas space. There are a lot of different factors driving the price of crude oil right now, Ty, from domestic production to volatility in the Middle East, all kinds of different influences. So our next guest is saying that selling has subsided right now in crude as geopolitical risks increase. and he's here to tell us how he's navigating that energy space. So joining us now is Phil Strebel, the chief market strategist over at Blue Line Futures.

Phil, thanks so much for being with us. Now, one of the big reasons why we're talking about crude is the price movements that we are seeing. It's also because we got a lot of fundamental news or a view from oil majors like Exxon, Mobile, and Chevron as well. So take us through why you think crude oil is due for this pop, at least near to medium term. Yeah, I mean, earlier in the week after gaping lower, it seemed like that geopolitical uncertainty and risk premium was removed and traders could get back to the basics on what's driving energy prices. We saw futures bottom on Tuesday on improving fundamentals. The Department of Energy, they added 3 million barrels to the SPR. Oil inventory showed an unexpected decline of

510,000 barrels. And we've been monitoring China's recovery. Remember, China is the number two consumer of crude oil. We've seen some upside surprises in their manufacturing data and starting to show that the stimulus measures, they're taken as gaining traction. So, you know, there's expectations that we could see additional stimulus out of China after the U.S. election. And finally, OPEC, their production could be delayed. So then you get this geopolitical situation in the Middle East. And now we're back at where we're having $2.50 ranges on crude oil. But realistically, if you back up, we think once you get the uncertainty out of the election away, you get the Chinese stimulus starting to take shape. The U.S. the euros don't start to cut rates, and then you get the participation by money money managers coming

back in. That's where you get the mid-70-dollar crude. All right. So if that's the case, do you just straight up play the oil futures market with it? Do you play energy-related stocks? Do you use ETFs that track certain stocks in the industry? How exactly do you do that? Yeah. I mean, if you do look at Exxon, they are one of the best performers, you know, one of the best majors this year. We own that game and our wealth management for our clients in our concentrated portfolio. That's where we have 10 names, no more than 10% allocation in any one name and no more than 50% allocated to cash. But the trade that we believe is that buying the January microcrued contract, it keeps you in the game until mid-December. We like the microcrued because every

$1 move is a $100 move in a client's account. We're recommending to buy the January at $66 with a stop at $63. We're targeting $75. So essentially the risk is $300. The reward is $900. All right. So there's the play using micro crude futures. Phil Strebel, thank you very much, sir. Have a nice weekend. You too. All right. So Tyler, with the crude trade, there are instances where people like to use these leveraged contracts, whether they be futures or options, because they do provide a little bit more oomph, some octane. But it also lets you define the risk, right? And that's the big thing. So as Phil points out, in this kind of a situation with a stop loss there, you say, hey, I'm going to risk no more than $3 to the downside, looking for that move to the

upside if it's there. So it's an interesting way to play it and limit the downside. Sure, exactly. All right, Tom, thank you very much. Kelly, back to you. Thank you both. Roblox reporting a massive third quarter earlier this week. Stock surged, but still out there are concerns raised by short sellers about parental controls and platform security. After the break, we'll talk to Roblox's CEO. Stay with us. Welcome back to Power Lunch. I'm Bertha Coombs with your CNBC News Update. U.S. intelligence officials concluded Russia was behind. Russia was behind a viral video on social media platform X, which falsely claimed to show a Haitian immigrant illegally voting in Georgia. The group of federal agencies said the Kremlin also manufactured a video

accusing someone associated with the Democratic presidential ticket of taking a bribe from a U.S. entertainer. The agencies warn this is part of Moscow's broader effort to undermine U.S. election integrity. Groups representing major airlines are criticizing the Biden administration today, over its probe into air travel competition. They say the Justice Department review could dramatically impact the future aviation here in the U.S., and they're asking the DOJ to extend the public comment period for another 60 days. And the Los Angeles Dodgers are celebrating their world championship right now with a downtown parade and stadium ceremony in LA. They clinch the title for the eighth time Wednesday after defeating the Yankee.

Yankees in five games. And Kelly, for Mukie Betts, it's the third World Series ring. This one, especially sweet, after surviving getting mugged in the outfield during game four in Yankee Stadium. He's amazing. He's a great player. He's like my favorite of all of them to watch because he's just all in on everybody. He's terrific defensively.

He's great hitter. He won his first ring with the Red Sox. And he can play all these different positions, outfield, infield, the whole thing. Thanks, Bertha. And shares of Roblox are slightly. lower after a big surge on the back of a third quarter earnings beat yesterday. They're still at 23% this week. The online gaming platform raised its full year guidance, reported its highest daily active user growth rate in about two years, and this after they were under scrutiny following a

report last month from short seller Hindenberg Research, alleging murky user data and highlighting safety issues prompting the company to introduce new features last week. Our own Steve Kovac joins us now with an exclusive interview with the company's CEO. Steve? Hey there, Kelly. Thank you. And I'm joined by CEO of Roblox Dave Bazuki. Coming off that big earnings report, Blockbuster, by the way, up nearly 20% on strong user growth. You raised your guidance for the year. So I want to dive into some of this. Starting with user growth, we do know from this Hinderberg report that they allege that there's kind of this funky accounting going on, at least that's what they're alleging here. part of it, the issue here seems to be they say you guys aren't able to kind of separate actual

people versus accounts. That could be people running multiple accounts, that you're running two separate types of books. Can you kind of talk through that and then talk about what is behind the user growth that we just saw this last quarter? So first, thanks for having me on the show, Steve. We had an amazing quarter driven by absolutely amazing viral content, all kinds of new experiences, awesome creators coming on our platform, revenue up 29% year on year, daily active users up 27%, over 13 users up 34%, India and Japan up 50%, and $218 million of free cash flow. That report, we completely reject all the implications of that report. That is by a short seller.

I think many of us know the motivation sometimes of a short seller. We make financial notes of how we account all of this stuff, and we just completely reject the report. Okay. And so those user numbers, just to be clear, those 88.9 million daily active users, those are accounts or people? How do you go? Those are daily active accounts in our S-1, in our 10-Q.

We have a lot of notes, and we've never changed. this. Something, if you read our shareholder letter, it's really interesting. The ratio of our bookings to our daily active users, to our hours, has been consistent for six years. And if anything, our bookings are growing more quickly than our daily active users. We have no motivation. Our whole, our value system is around transparency and clarity. There's no motivation for us to do anything other than report accurately. Okay. Let's move on to safety. You guys, last

couple weeks, introduce a slew of new features, including some deeper parental controls and things like that. I think, I know this has been top of mind for you, but also, you know, at the same time, we've seen level criticism at you guys, especially in this Hindenberger report, some examples

like that. There are numerous issues to tackle here, but one thing I was interested in is age verification, because that seems to be not just a problem or a challenge for you guys. Meta's going through it as well. How do you determine if it's actually a 13-year-old? Can you talk a little bit about how you guys are thinking about age verification?

And do you agree with Meta that Apple and Google need to take a deeper role here through their app stores to verify ages? Once again, we completely reject all the implications of that report. Every day, tens of millions of people live on Roblox every day are video. vision, mission to connect a billion people with optimism, civility. Safety is the primary thing we focus on. We literally ship improvements to our safety system almost every other week. We shipped over 30 improvements in the last year.

I want to share an example of how far we are into leading the charge here and trying to help the rest of the industry. Our voice safety model, AI developed inside of roadblocks that we run all of the voice on our platform through we shared it live on Hugging Face. It popped up as one of the most downloaded models on all of Hugging Face and over 10,000 people picked it up. There's now large other companies using our voice safety model. So it's a top priority.

We think there's a place on the internet for a beacon for safety and civility and that's Roblox really. And the way we design our safety systems, yes, age verification is a very very important, but we don't just think of safety for younger people. We think of safety and civility, really for everyone on the platform. And do you think Apple and Google have a deeper role to play on that age verification front? I would say there's opportunities everywhere, but we go beyond that. We are not waiting for Apple and Google. We are not depending on someone else. We build our safety systems, both content, communication, AI-based safety systems. We

We have over 150 AI systems supporting our civility initiatives, so we're not waiting for anyone to do something else on their platform. Okay, we've got to send it over. Tyler has a question for you. Dave, thank you for joining us today. I want to read something from a recent Bloomberg news report and get your reaction to it. And I quote, unlike competitors, Roblox until recently let children of any age establish accounts and talk to strangers. Child safety advocates have criticized the ease with which kids on Roblox can chat with people they don't know.

and issue recent changes may address. As of September, Roblox no longer lets children under the age of five set up accounts. That seems like a bit of a fig leaf on the problem if it is accurate. Would you address the comments here by these authors at Bloomberg, whether they are accurate and what you have done to ensure that children of a young age, and between five and 15 is a big difference, that those children are not. are safe on your website. Hey, yeah, first I do want to just recognize how important this is to us as a company.

I've got four kids. They've been playing Roblox for a long time. And of our 2,500 employees, many, many, many of us have our own kids playing on the platform. We're very thoughtful in our safety systems for all ages, both on experience. guidelines, how we filter text, how we control who people communicate with. And even in Q3, we introduced a suite of innovations. We introduced innovations helping creators help moderate their own experiences. We introduced improvements, simplifications for parents on our platform as well.

Really it's something we're working on always, and we will never. stop working on. David, it seems like age verification could solve a lot of these issues that, again, it's not exclusive to Roblox, meta especially is going through this and TikTok as well. It feels like age verification can solve a lot of it. I want to lean in that we want to go well beyond age verification. If someone ends up on Roblox who is 16, even if they've used different ways to verify their age, we want to protect them as well. well. So we're not just thinking under 13. We're thinking everyone on our platform. We, every piece of text on our platform goes through a filter. Every image uploaded on our platform

goes through a moderator. There's no way to share images on Roblox, zero. So we think of this as a much more holistic opportunity for us. We think there's an opportunity for Roblox to be the beacon of internet civility and safety. Dave, if that's the case, how do you account for the multitude of accounts with names like Jeffrey Epstein on them or other choice people who are not only intentionally doing nefarious things, but perhaps not under such obvious usernames are still kind of trafficking in the kind of stuff that would make parents sick to know about? This isn't just about age verification. It's kind of do you have the basic amount of staff, whether it's AI moderation or in-person moderation, to go through and find accounts like that and make sure. that they're removed from the platform. And if you have to build that out, is that going to be an overhang on earnings going forward? Yeah, I want to highlight your noting usernames, which we take

very seriously. We take every bad experience on our platform seriously. But I want to highlight in Q3 and really just in the last month, there was over 21 billion hours of very optimistic, civil, engaging playtime on our platform. We have had countless numbers of people reach out to us and share that Roblox has literally saved their child's life by providing a way to connect and communicate. And of course, we will never stop. And of course, if an account, as you name it, is offensive, we will continue to improve our systems.

But I do want to highlight our vision and our mission and the fact that we're not. that will never stop on this. If I can just sneak in one more question here. And I'd like to talk a little about the quarter as well. Yeah, I do. I want to talk about advertising. I'd like to talk a little about our quarter, which was enormous. Like, we had the biggest quarter ever.

It was driven by almost 2 million creators making incredible content. Dressed to impress on our platform. We went completely viral. Millions and millions of people, young and old. On my social media feed, I was seeing college students playing dress to impress in their college classroom. I want to highlight NFL universe the first time on Roblox that a literally a sports league sponsored experience popped into our top standings. What you're seeing on Roblox really is the early signs of what we believe will be a platform supporting 10% of the whole gaming ecosystem.

It's driven by growth around the world, is driven by growth of older players. It's driven by growth of amazing content. And safety and civility is the foundation of this. It makes good business sense for us to be the safest place on the Internet. Great. That's a great way to end it. I did want to get an advertising. We'll have to save that for another time.

Dave Busuki, thank you so much for addressing these issues with us. Day after, our name is a huge blockbuster report. Thank you. Thanks for being here. Enjoyed it. Kelly, Tyler, I'll send it back over here. Steve and Mr. Bozuski, thank you, Mr. Bozuki for taking our very direct questions. We appreciate it.

Remember that CNBC is live all night on election night. We will have the results as they come in and reaction from the biggest names in business. Coverage starts at 7 p.m. sharp eastern from the New York Stock Exchange. We have live coverage in the overnight hours. We're not going to stop. It's going to go all night long. More results plus Asian and European markets as they open. Squawk box starts at 5 a.m.

not 6 a.m. It's usual time. Stay with CNBC on election night all night, and I do mean all night. Power lunch will be right back. Welcome back. It's time now for three-stock lunch. We'll trade some key earnings movers of the day and week, plenty to pick from. Here with our trades is Quinn Taitro.

He's founder and president of Jewel Financial. Quint, welcome back. And we'll start with Apple. We haven't spent a lot of time on that one, but it's trading lower today by one and a half percent. After topping Q4 estimates on the top and bottom lines last night, 6 percent growth in iPhone and overall sales, but net income was down on that one-off tax charge. Quinn, you've been a bit of a contrarian call on Apple. What do you do here? Yeah, I'm going to continue to be contrarian, which is not fun because not a lot of people like that,

but I'm just not a fan of Apple here, Kelly, and it comes down to valuation. You're talking about a company that's projecting low double-digit growth, trading 26 times forward earnings. They have also got a levered up balance sheet. Now, yes, the Apple intelligence may kick off a replacement cycle with the phones, but I'd rather wait to see it in the numbers before I pay up for this stock up here. It's just not interesting to me. Well, let's move on to another A, Amazon, higher after posting stronger than expected third quarter earnings and revenue. Cloud computing, advertising businesses clicking in. Quint, what do you say here on Amazon? Yeah, Tyler, it is clicking in. This is one that I was also skeptical of because of the valuation,

but now we see it in the numbers. And obviously the stock is reacting to that. They're positive on all fronts, retail sales, better than anticipated, which is great from a consumer standpoint. But the cloud business just shows us how much people are spending on this AI movement in the small business, medium-sized business area, and their own KAP-X spending. So even though it still is rich in valuation, 22% grow 3 to 33 times earnings,

this is a name that I think grows into those numbers. and is attractive here on this breakout. I'd be a buyer of Amazon. All right. Clear answer. How about Tesla then? That kind of takes us back a couple of weeks when it popped 20% on that huge gain and profit for the third quarter. Now this week, giving some of that back, what's the trade here, Quinn? Yeah, Kelly, I'm a fan of Tesla. I'm a fan of Elon. And when you get a name like this that has a great quarter on all fronts and then pulls back digesting that move, that's an opportunity for people here to pick up shares. It doesn't happen often. A lot of these names just get up and go. But again, this pullback, I think, offers us opportunity. It's pretty rich. The stocks trading

36, or sorry, 75 times forward 36% growth. But Tesla has this history of growing into these numbers when new products are coming down the pike, and we think that will transpire. We are believers in the robotaxie. We're believers in the robots. I mean, Elon does amazing things. It also is a name that would clearly move. We'll have pin action on the election next week since Elon hit the Trump trail. So we do like Tesla on this pullback here. We are already owners, but we have been adding to our position this week. All right.

Quinn, thank you so much. We appreciate your time. Have a great weekend, Quinn Taitro. And remember, you can always hear us, always on our podcast. Be sure to follow and listen to Power Lunch wherever you go. We will be right back with a final check on the markets. Welcome back to Power Lunch, everybody. Before we go, a great story on CNBCN.com today by Jennifer Elias.

An all-hands meeting at Google on Wednesday were executives dressed in Halloween costumes. They fielded questions from nervous employees about possible job cuts. The meeting came after Alphabet's earnings when the CFO indicated more cost cuts could be coming. And at this meeting, the CFO was wearing a Reggie Miller jersey, he the basketball player. The chief scientist was dressed as a source. Starfish and CEO Sundar Pichai wore a t-shirt saying error 404, costume not found. For the full story, please visit CNBC.com. I mean, is there ever going to be a leadership summit that doesn't include airing of grievances by the employee base?

I think they should just stop having these. What is achieved? Then just make it a one-way broadcast. And then you're dressed as an error message. Different kind of error in this case. The market's looking like they're going to go out on a high note. There's an hour left to play, up 363 points on the Dow. As you see, they're almost 9 tenths of a percent.

Have a great weekend to everybody. Thank you so much for watching Power Lunch. Big round trip and bond yields. Last weekend before the election, feel the drama building. Closing bell starts right now.